The Fannie Mae Home Purchase Sentiment Index (HPSI) dipped 1.1 points to 81.7 in October, the third decrease in as many months. Four of the six components that comprise the HPSI fell during the month, Fannie Mae said.
The share of consumers reporting significantly higher income over the past year experienced the largest drop, decreasing 8 percent on net. The net share of consumers expecting home prices to go up in the next year fell 3 percent, and those who expect mortgage rates to drop and those who are confident about not losing their job each dropped by 1 percent in October. However, more consumers said they believe now is a good time to buy and a good time to sell a home – increasing two and four points on net, respectively.
“The HPSI fell in October for the third straight month from its record high in July, reaching the lowest level since March. Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan said in a press release. “Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moderate. Furthermore, consumers’ perception of their income over the past year deteriorated sharply in October to the worst showing since early 2013, weighing on the index. However, this component of the HPSI is volatile from month to month, and the firming trend in wage gains from the October jobs report, if sustained, may foreshadow an improving view in the near future.”
Overall, the HPSI is down 1.5 points since this time last year. Partially reversing the decrease from last month, the net share of Americans who say it is a good time to buy a house rose by 2 percent to 31 percent. The share who think it is a good time to buy remained at an all-time survey low.
The net percent of those who say it is a good time to sell rose to 19 percent in October, 1 point away from the all-time survey high seen in July. The share who think it is a bad time to sell tied an all-time survey low last reached in July.
The net share of Americans who say that home prices will go up continued to fall in October to 31 percent.
The net share of those who say mortgage rates will go down over the next 12 months fell to 45 percent.
The net share of Americans who say they are not concerned with losing their job fell to 69 percent.
The net share of Americans who say their household income is significantly higher than it was 12 months ago fell to 4 percent, the lowest it has been in more than three years.